Taxes Consolidation Act 1997

87.—(1) Where, in computing for tax purposes the profits or gains of a trade or profession, a deduction has been allowed for any debt incurred for the purposes of the trade or profession, then, if the whole or any part of that debt is thereafter released, the amount released shall be treated as a receipt of the trade or profession arising in the period in which the release is effected.

(2) If in any case referred to in subsection (1) the trade or profession has been permanently discontinued at or after the end of the period for which the deduction was allowed and before the release was effected, or is treated for tax purposes as if it had been so discontinued, section 91 shall apply as if the amount released were a sum received after the discontinuance.

88 Deduction for gifts to Enterprise Trust Ltd. [FA92 s56; FA96 s56(b); FA97 s64]

88.—(1) In this section, “the company” means the company incorporated on the 30th day of October, 1991, as The Enterprise Trust Limited.

(2) This section shall apply to a gift of money which—

(a) on or before the 31st day of December, 1999, is made to the company and accepted by it,

(b) is to be applied by the company solely for the objects set out in its memorandum of association,

(c) apart from subsection (3) would not be deductible in computing for the purposes of corporation tax the profits or gains of a trade or profession, and

(d) is not income to which section 792 applies.

(3) (a) Subject to paragraph (b) and subsection (2), where a company (in this section referred to as a “donor”) makes a gift to which this section applies and claims relief from tax by reference to the gift, the net amount of the gift shall be treated for the purposes of corporation tax as—

(i) a deductible trading expense of a trade carried on by the donor, or

(ii) an expense of management deductible in computing the total profits of the donor,

incurred by it in the accounting period in which the gift is made.

(b) In determining for the purposes of paragraph (a) the net amount of the gift, the amount or value of any consideration received by a donor as a result of making the gift, whether received directly or indirectly from the company or any other person, shall be deducted from the amount of the gift, and relief under this section shall not be given to a donor for an accounting period—

(i) if the net amount of the gift (or the aggregate of the net amounts of gifts) made by the donor in that accounting period, being a gift or gifts, as the case may be, to which this section applies, does not exceed £500,

(ii) to the extent to which the net amount of the gift (or the aggregate of the net amounts of gifts) made by the donor in that accounting period, being a gift or gifts, as the case may be, to which this section applies, exceeds £100,000,

(iii) in respect of a gift made at any time in the year ending on the 31st day of December in the year 1998 or 1999, if at that time the aggregate of the net amounts of all gifts to which this section applies made to the company within that year exceeds £1,500,000.

(4) A claim under this section shall be made with the return required to be delivered under section 951 for the accounting period in which the payment is made.

(5) Where a donor makes a gift in respect of which relief is not to be given by virtue of subparagraph (iii) of subsection (3)(b), the company shall, by notice in writing given to the donor within 30 days of the making of the gift, advise the donor accordingly.

(6) Where a gift to which this section applies is made by a donor in an accounting period of the donor which is less than 12 months, the amounts specified in subparagraphs (i) and (ii) of subsection (3)(b) shall be proportionately reduced.

CHAPTER 7 Special measures on discontinuance of, and change of basis of computation of profits or gains of, a trade or profession

89 Valuation of trading stock at discontinuance of trade. [ITA67 s62(1) (apart from proviso) and (2); FA70 s23(4)]

89.—(1) (a) In this section, “trading stock” means, subject to paragraph (b), property of any description, whether real or personal, which is either—

(i) property such as is sold in the ordinary course of the trade in relation to which the expression is used or would be so sold if it were mature or if its manufacture, preparation or construction were complete, or

(ii) materials such as are used in the manufacture, preparation or construction of property such as is sold in the ordinary course of that trade.

(b) For the purposes of this section, “trading stock”, in relation to a trade, includes any services, article or material which, if the trade were a profession, would be treated as work in progress of the profession for the purposes of section 90, and references to the sale or transfer of trading stock shall be construed accordingly.

(c) References in this section to a trade having been discontinued or to the discontinuance of a trade shall be construed as not referring to or including any case where such trade was carried on by a single individual and is discontinued by reason of such individual's death (whether such trade is or is not continued by another person after such death), but shall be construed as referring to and including every other case where a trade has been discontinued or is, by virtue of any of the provisions of the Tax Acts, treated as having been discontinued for the purpose of computing tax.

(2) In computing the profits or gains of a trade which has been discontinued, any trading stock belonging to the trade at the discontinuance of the trade shall be valued in accordance with the following provisions:

(a) in the case of any such trading stock—

(i) which is sold, or is transferred for valuable consideration, to a person who carries on or intends to carry on a trade in the State, and

(ii) the cost of which to such person on such sale or transfer may be deducted by such person as an expense in computing for any purpose of the Tax Acts the profits or gains of the trade carried on or intended to be carried on by such person,

the value of such trading stock shall be taken to be the price paid for such trading stock on such sale or the value of the consideration given for such trading stock on such transfer, as the case may be;

(b) in the case of any other such trading stock, the value of such other trading stock shall be taken to be the amount which it would have realised if it had been sold in the open market at the discontinuance of the trade.

90 Valuation of work in progress at discontinuance of profession. [FA70 s23(1) to (3) and (5); FA81 s9(d)]

90.—(1) Where, in computing for any of the purposes of the Tax Acts the profits or gains of a profession which has been discontinued, a valuation is taken of the work of the profession in progress at the discontinuance, that work shall be valued as follows:

(a) if the work is transferred for money or any other valuable consideration to a person who carries on or intends to carry on a profession in the State, and the cost of the work may be deducted by that person as an expense in computing for any such purpose the profits or gains of that profession, the value of the work shall be taken to be the amount paid or other consideration given for the transfer;

(b) if the work is not to be valued under paragraph (a), its value shall be taken to be the amount which would have been paid for a transfer of the work on the date of the discontinuance as between parties at arm's length.

(2) Where a profession is discontinued and the person by whom it was carried on immediately before the discontinuance so elects, by notice in writing sent to the inspector at any time within 24 months after the discontinuance, the amount, if any, by which the value of the work in progress at the discontinuance (as ascertained under subsection (1)) exceeds the actual cost of the work shall not be taken into account in computing the profits or gains of the period immediately before the discontinuance, but the amount by which any sums received for the transfer of the work exceed the actual cost of the work shall be included in the sums chargeable to tax under section 91 as if it were a sum to which that section applies received after the discontinuance.

(3) Subsections (1) and (2) shall apply where a profession is treated for any of the purposes of the Tax Acts as permanently discontinued as they apply in the case of an actual discontinuance, but shall not apply in a case where a profession carried on by a single individual is discontinued by reason of such individual's death.

(4) References in this section to work in progress at the discontinuance of a profession shall be construed as references to—

(a) any services performed in the ordinary course of the profession, the performance of which was wholly or partly completed at the time of the discontinuance and for which it would be reasonable to expect that a charge would have been made on their completion if the profession had not been discontinued, and

(b) any article produced, and any such material as is used, in the performance of any such services,

and references in this section to the transfer of work in progress shall include references to the transfer of any benefits and rights which accrue, or might reasonably be expected to accrue, from the carrying out of the work.

91 Receipts accruing after discontinuance of trade or profession. [FA70 s20(1) to (4) and (5)(b), (c) and (d)]

91.—(1) Subject to subsection (2), this section shall apply to all sums arising from the carrying on of a trade or profession during any period before the discontinuance of the trade or profession (not being sums otherwise chargeable to tax), in so far as the amount or value of the sums was not taken into account in computing the profits or gains for any period before the discontinuance, and whether or not the profits or gains for the period were computed on an earnings basis or on a conventional basis.

(2) This section shall not apply to any of the following sums—

(a) sums received by a person beneficially entitled to such sums who is not resident in the State, or by a person acting on such person's behalf, which represent income arising directly or indirectly from a country or territory outside the State,

(b) a lump sum paid to the personal representatives of the author of a literary, dramatic, musical or artistic work as a consideration for the assignment by them, wholly or partially, of the copyright in the work,

(c) sums realised by the transfer of trading stock belonging to a trade at the discontinuance of the trade or, in a case in which the profits or gains of a profession were computed on an earnings basis at the discontinuance of the profession, sums realised by the transfer of the work of the profession in progress at the discontinuance, and

(d) sums arising to an individual from a work which is such that any profits or gains that might have arisen to the individual from its publication, production or sale, as the case might be, would in accordance with section 195(3) have been disregarded for the purposes of the Income Tax Acts if they had arisen before the discontinuance of that individual's profession.

(3) Where any trade or profession, the profits or gains of which are chargeable to tax under Case I or II of Schedule D, has been permanently discontinued, tax shall be charged under Case IV of that Schedule in respect of any sums to which this section applies received after the discontinuance subject to any such deduction as is authorised by subsection (4).

(4) In computing the charge to tax in respect of sums received by any person which are chargeable to tax by virtue of this section (including amounts treated as sums received by such person by virtue of section 87), there shall be deducted from the amount which apart from this subsection would be chargeable to tax—

(a) any loss, expense or debit (not being a loss, expense or debit arising directly or indirectly from the discontinuance itself) which, if the trade or profession had not been discontinued, would have been deducted in computing for tax purposes the profits or gains of the person by whom the trade or profession was carried on before the discontinuance, or would have been deducted from or set off against those profits or gains as so computed, and

(b) any capital allowance to which the person who carried on the trade or profession was entitled immediately before the discontinuance and to which effect has not been given by means of relief before the discontinuance.

(5) For the purposes of this Chapter—

(a) the profits or gains of a trade or profession in any period shall be treated as computed by reference to earnings where all credits and liabilities accruing during that period as a consequence of the carrying on of the trade or profession are taken into account in computing those profits or gains for tax purposes, and not otherwise, and “earnings basis” shall be construed accordingly,

(b) the profits or gains of a trade or profession in any period shall be treated as computed on a conventional basis where they are computed otherwise than by reference to earnings, and

(c) the value of any sum received in payment of a debt shall be treated as not taken into account in the computation to the extent that a deduction has been allowed in respect of that sum under section 81(2)(i).

92 Receipts and losses accruing after change treated as discontinuance. [FA70 s22]

92.—(1) This section shall apply in any case where, as a result of a change in the persons engaged in carrying on a trade or profession, the trade or profession is treated for any of the purposes of the Tax Acts as if it had been permanently discontinued and a new trade or profession set up and commenced.

(2) (a) Sections 91 and 95 shall apply in the case of any such change as if the trade or profession had been permanently discontinued.

(b) Notwithstanding paragraph (a), where the right to receive any sums to which section 91 applies is or was transferred at the time of the change to the persons carrying on the trade or profession after the change, tax shall not be charged by virtue of that section, but any sums received by those persons by virtue of the transfer shall be treated for all purposes as receipts to be taken into the computation of profits or gains of the trade or profession in the period in which they are received.

(3) In computing for tax purposes the profits or gains of the trade or profession in any period after the change, there may be deducted a sum equal to any amount proved during that period to be irrecoverable in respect of any debts credited in computing for tax purposes the profits or gains for any period before the change (being debts the benefit of which was assigned to the persons carrying on the trade or profession after the change), in so far as the total amount proved to be irrecoverable in respect of those debts exceeds any deduction allowed in respect of them under section 81(2)(i) in a computation for any period before the change.

93 Cash basis, etc: relief for certain individuals. [FA70 s25]

93.—(1) In this section—

“the net amount” with which a person is chargeable to tax under section 91 means the amount with which such person is so chargeable after making any deduction authorised by section 91(4) but before giving any relief under this section;

“relevant date” means—

(a) in relation to tax under section 91, the date of the permanent discontinuance, and

(b) in relation to tax under section 94, the date of the change of basis.

(2) Where an individual born before the 6th day of April, 1919, or the personal representative of such an individual, is chargeable to tax under section 91 or 94 and—

(a) the individual was engaged in carrying on the trade or profession on the 4th day of August, 1970, and

(b) the profits or gains of the trade or profession were not computed by reference to earnings in the period in which the date specified in paragraph (a) fell, or in any subsequent period ending before or on the relevant date,

the net amount with which such individual is so chargeable to tax shall be reduced by multiplying that net amount by the fraction specified in subsection (4).

(3) Where section 94 applies in relation to a change of basis taking place on a date before the 4th day of August, 1970, then, in relation to tax chargeable by reference to that change of basis, subsection (2) shall apply as if—

(a) that earlier date were substituted for the date specified in paragraph (a) of that subsection, and

(b) paragraph (b) of that subsection were deleted.

(4) The fraction referred to in subsection (2) is—

(a) where on the 6th day of April, 1970, the individual had not attained the age of 52 years, nineteen-twentieths,

(b) where on that date the individual had attained the age of 52 years, but had not attained the age of 53 years, eighteen-twentieths, and so on, reducing the fraction by one-twentieth for each year the individual had attained, up to the age of 64 years,

(c) where on that date the individual had attained the age of 65 years or any greater age, five-twentieths.

94 Conventional basis: general charge on receipts after change of basis. [FA70 s26(1) to (4)]

94.—(1) Where in the case of any trade or profession the profits or gains of which are chargeable to tax under Case I or II of Schedule D there has been—

(a) a change from a conventional basis to the earnings basis, or

(b) a change of conventional basis which may result in receipts dropping out of computation,

tax shall be charged under Case IV of Schedule D in respect of sums to which this subsection applies which are received after the change and before the trade or profession is permanently discontinued.

(2) Subsection (1) shall apply to all sums arising from the carrying on of the trade or profession during any period before the change (not being sums otherwise chargeable to tax) in so far as their amount or value was not taken into account in computing the profits or gains for any period.

(3) Where in the case of any profession the profits or gains of which are chargeable to tax under Case II of Schedule D—

(a) there has been a change from a conventional basis to the earnings basis, or a change of conventional basis, and

(b) the value of work in progress at the time of the change was debited in the accounts and allowed as a deduction in computing profits for tax purposes for a period after the change,

then, in so far as no counterbalancing credit was taken into account in computing profits for tax purposes for any period ending before or on the date of the change, tax shall be charged under subsection (1) in respect of that amount for the year of assessment in which the change occurred as if that amount were a sum to which subsection (2) applies and the change of basis were a change of the kind described in subsection (1).

(4) In this section, references to work in progress at the time of a change of basis shall be construed in accordance with section 90(4) but as if references in that section to the change of basis were references to the discontinuance.

(5) There shall be a change from a conventional basis to the earnings basis at the end of a period, the profits or gains of which were computed on a conventional basis, if the profits or gains of the next succeeding period are computed by reference to earnings and, if the profits or gains of 2 successive periods are computed on different conventional bases, a change of conventional basis shall occur at the end of the earlier period.

95 Supplementary provisions as to tax under section 91 or 94. [FA70 s21; CTA76 s164 and Sch3 PtII]

95.—(1) In the case of a transfer for value of the right to receive any sums described in section 91(1) or 94, any tax chargeable by virtue of either of those sections shall be charged in respect of the amount or value of the consideration (or, in the case of a transfer otherwise than at arm's length, in respect of the value of the right transferred as between parties at arm's length), and references in those sections to sums received shall be construed accordingly.

(2) Where an individual is chargeable to tax by virtue of section 91 in respect of any sums received after the discontinuance of a trade or profession, and the profits or gains of the trade or profession to which such individual was entitled before the discontinuance fell to be treated as earned income for the purposes of the Income Tax Acts, those sums shall also be treated as earned income for those purposes but after any reduction in those sums under section 93.

(3) Where any sum chargeable to tax by virtue of section 91 or 94 is received in any year of assessment beginning not later than 10 years after the discontinuance or, as the case may be, change of basis by the person by whom the trade or profession was carried on before the discontinuance or change or by such person's personal representatives, such person or (in either case) such person's personal representatives may, by notice in writing sent to the inspector within 2 years after the end of that year of assessment, elect that the tax so chargeable shall be charged as if the sum in question were received on the date on which the discontinuance took place or, as the case may be, on the last day of the period at the end of which the change took place, and, in any such case, an additional assessment shall (notwithstanding anything in section 924(2)) be made accordingly and, in connection with that assessment, no further deduction or relief shall be made or given in respect of any loss or allowance deducted in pursuance of section 91(4).

(4) Where work in progress at the discontinuance of a profession, or the responsibility for its completion, is transferred, the sums to which section 91 applies include any sums received by means of consideration for the transfer and any sums received by means of realisation by the transferee on behalf of the transferor of the work in progress transferred.

(5) No amount shall be deducted under section 91(4) if that amount has been allowed under any other provision of the Tax Acts.

(6) No amount shall be deducted more than once under section 91(4) and, as between sums chargeable for one year of assessment and sums chargeable for a subsequent year of assessment, any deduction in respect of a loss or capital allowance shall be made against sums chargeable for the earlier year of assessment but, in the case of a loss which by virtue of this subsection or section 91(4) is to be allowed after the discontinuance, a deduction shall not be made from any sum chargeable for a year of assessment preceding that in which the loss is incurred.

CHAPTER 8 Taxation of rents and certain other payments

96 Interpretation (Chapter 8). [ITA67 s80(1), (2), (4) and (5) and s81(1) (definition of “the person chargeable”); FA69 s27; FA75 s19 and Sch2 PtI par1 and 2]

96.—(1) In this Chapter, except where the context otherwise requires—

“easement” includes any right, privilege or benefit in, over or derived from premises;

“lease” includes an agreement for a lease and any tenancy, but does not include a mortgage, and “lessee” and “lessor” shall be construed accordingly, and “lessee” and “lessor” include respectively the successors in title of a lessee or a lessor;

“the person chargeable” means the person entitled to the profits or gains arising from—

(a) any rent in respect of any premises, and

(b) any receipts in respect of any easement;

“premises” means any lands, tenements or hereditaments in the State;

“premium” includes any like sum, whether payable to the immediate or a superior lessor or to a person connected with the immediate or superior lessor;

“rent” includes—

(a) any rentcharge, fee farm rent and any payment in the nature of rent, notwithstanding that the payment may relate partly to premises and partly to goods or services, and

(b) any payment made by the lessee to defray the cost of work of maintenance of or repairs to the premises, not being work required by the lease to be carried out by the lessee.

(2) (a) In ascertaining for the purposes of this Chapter the duration of a lease, the following provisions shall apply:

(i) where any of the terms of the lease (whether relating to forfeiture or to any other matter) or any other circumstances render it unlikely that the lease will continue beyond a date falling before the expiration of the term of the lease and the premium was not substantially greater than it would have been (on the assumptions required by paragraph (b)) if the term had been one expiring on that date, the lease shall not be treated as having been granted for a term longer than one ending on that date;

(ii) where the terms of the lease include provision for the extension of the lease beyond a particular date by notice given by the lessee, account may be taken of any circumstances making it likely that the lease will be so extended;

(iii) where the lessee or a person connected with the lessee is or may become entitled to a further lease or the grant of a further lease (whenever commencing) of the same premises or of premises including the whole or part of the same premises, the term of the lease may be treated as not expiring before the term of the further lease.

(b) Paragraph (a) shall be applied by reference to the facts which were known or ascertainable at the time of the grant of the lease or, in relation to tax under section 98(4), at the time when the contract providing for a variation or waiver of a kind referred to in section 98(4) is entered into, and in applying paragraph (a)—

(i) it shall be assumed that all parties concerned, whatever their relationship, act as they would act if they were at arm's length, and

(ii) if by the lease or in connection with the granting of it—

(I) benefits were conferred other than vacant possession and beneficial occupation of the premises or the right to receive rent at a reasonable commercial rate in respect of the premises, or

(II) payments were made which would not be expected to be made by parties so acting if no other benefits had been so conferred,

it shall be further assumed, unless it is shown that the benefits were not conferred or the payments were not made for the purpose of securing a tax advantage in the application of this Chapter, that the benefits would not have been conferred nor the payments made had the lease been for a term ending on the date mentioned in paragraph (a).

(3) Where the estate or interest of any lessor of any premises is the subject of a mortgage and either the mortgagee is in possession or the rents and profits are being received by a receiver appointed by or on the application of the mortgagee, that estate or interest shall be deemed for the purposes of this Chapter to be vested in the mortgagee, and references to a lessor shall be construed accordingly; but the amount of the liability to tax of any such mortgagee shall be computed as if the mortgagor was still in possession or, as the case may be, no receiver had been appointed and as if it were the amount of the liability of the mortgagor that was being computed.

(4) Where an inspector has reason to believe that a person has information relevant to the ascertainment of the duration of a lease in accordance with subsection (2), the inspector may by notice in writing require such person to give, within 21 days after the date of the notice or such longer period as the inspector may allow, such information relevant to the ascertainment of the duration of the lease on the matters specified in the notice as is in such person's possession.

97 Computational rules and allowable deductions. [ITA67 s81(4), (5), (6), (7) and (8); FA69 s22; FA97 s146(1) and Sch9 PtI par1(6)]

97.—(1) Subject to this Chapter, the amount of the profits or gains arising in any year shall for the purposes of Case V of Schedule D be computed as follows:

(a) the amount of any rent shall be taken to be the gross amount of that rent before any deduction for income tax;

(b) the amount of the profits or gains arising in any year shall be the aggregate of the surpluses computed in accordance with paragraph (c), reduced by the aggregate of the deficiencies as so computed;

(c) the amount of the surplus or deficiency in respect of each rent or in respect of the total receipts from easements shall be computed by making the deductions authorised by subsection (2) from the rent or total receipts from easements, as the case may be, to which the person chargeable becomes entitled in any year.

(2) The deductions authorised by this subsection shall be deductions by reference to any or all of the following matters—

(a) the amount of any rent payable by the person chargeable in respect of the premises or in respect of a part of the premises;

(b) any sums borne by the person chargeable—

(i) in the case of a rent under a lease, in accordance with the conditions of the lease, and

(ii) in any other case, relating to and constituting an expense of the transaction or transactions under which the rents or receipts were received,

in respect of any rate levied by a local authority, whether such sums are by law chargeable on such person or on some other person;

(c) the cost to the person chargeable of any services rendered or goods provided by such person, otherwise than as maintenance or repairs, being services or goods which—

(i) in the case of a rent under a lease, such person is legally bound under the lease to render or provide but in respect of which such person receives no separate consideration, and

(ii) in any other case, relate to and constitute an expense of the transaction or transactions under which the rents or receipts were received, not being an expense of a capital nature;

(d) the cost of maintenance, repairs, insurance and management of the premises borne by the person chargeable and relating to and constituting an expense of the transaction or transactions under which the rents or receipts were received, not being an expense of a capital nature;

(e) interest on borrowed money employed in the purchase, improvement or repair of the premises.

(3) (a) The amount of the deductions authorised by subsection (2) shall be the amount which would be deducted in computing profits or gains under the provisions applicable to Case I of Schedule D if the receipt of rent were deemed to be a trade carried on by the person chargeable—

(i) in the case of a rent under a lease, during the currency of the lease, and

(ii) in the case of a rent not under a lease, during the period during which the person chargeable was entitled to the rent,

and the premises comprised in the lease or to which the rent relates were deemed to be occupied for the purpose of that trade.

(b) For the purpose of this subsection, the currency of a lease shall be deemed to include a period immediately following its termination, during which the lessor immediately before the termination was not in occupation of the premises or any part of the premises, but was entitled to possession of the premises, if at the end of that period the premises have become subject to another lease granted by the lessor.

(4) (a) Where the person chargeable is entitled in respect of any premises (in this subsection referred to as “the relevant premises”) to a rent or to receipts from any easement and a sum by reference to which a deduction is authorised to be made by subsection (2) is payable by such person in respect of premises which comprise the whole or a part of the relevant premises and other premises, the inspector shall make, according to the best of his or her knowledge and judgment, any appropriate apportionment of the sum in determining the amount of any deduction under that subsection.

(b) Where the person chargeable retains possession of a part of any premises and that part is used in common by persons respectively occupying other parts of the premises, paragraph (a) shall apply as if a payment made in respect of the part used in common had been made in respect of those other parts.

(5) Any amount or part of an amount shall not be deducted under subsection (2) if it has otherwise been allowed as a deduction in computing the income of any person for the purposes of tax.

98 Treatment of premiums, etc. as rent. [ITA67 s83; FA69 s33(1) and Sch4 PtI; FA75 s20 and Sch2 PtI pars1 and 2; CTA76 s140(1) and Sch2 PtI par3]

98.—(1) Where the payment of any premium is required under a lease or otherwise under the terms subject to which a lease is granted and the duration of the lease does not exceed 50 years, the lessor shall be treated for the purposes of section 75 as becoming entitled when the lease is granted to an amount as rent (in addition to any actual rent) equal to the amount of the premium reduced by 2 per cent of that amount for each complete period of 12 months, other than the first, comprised in the term of the lease.

(2) (a) Where the terms subject to which a lease of any premises is granted impose on the lessee an obligation to carry out any work on the premises, the lease shall be deemed for the purposes of this section to have required the payment of a premium to the lessor (in addition to any other premium) of an amount equal to the amount by which the value of the lessor's estate or interest immediately after the commencement of the lease falls short of what its then value would have been if the work had been carried out, but otherwise than at the expense of the lessee, and the rent were increased accordingly.

(b) Notwithstanding paragraph (a), this subsection shall not apply in so far as the obligation requires the carrying out of work payment for which, if the lessor and not the lessee were obliged to carry it out, would be deductible from the rent under section 97(2).

(3) Where under the terms subject to which a lease is granted a sum becomes payable by the lessee in place of the whole or a part of the rent for any period, or as consideration for the surrender of the lease, the lease shall be deemed for the purposes of this section to have required the payment of a premium to the lessor (in addition to any other premium) of the amount of that sum; but—

(a) in computing tax chargeable by virtue of this subsection in respect of a sum payable in place of rent, the term of the lease shall be treated as not including any period other than that in relation to which the sum is payable, and

(b) notwithstanding subsection (1), rent treated as arising by virtue of this subsection shall be deemed to become due when the sum in question becomes payable by the lessee.

(4) Where as consideration for the variation or waiver of any of the terms of a lease a sum becomes payable by the lessee otherwise than as rent, the lease shall be deemed for the purposes of this section to have required the payment of a premium to the lessor (in addition to any other premium) of the amount of that sum; but—

(a) in computing tax chargeable by virtue of this subsection, the term of the lease shall be treated as not including any period which precedes the time at which the variation or waiver takes effect or falls after the time at which the variation or waiver ceases to have effect, and

(b) notwithstanding subsection (1), rent treated as arising by virtue of this subsection shall be deemed to become due when the contract providing for the variation or waiver is entered into.

(5) Where a payment mentioned in subsection (1), (3) or (4) is due to a person other than the lessor, subsection (1), (3) or (4), as the case may be, shall not apply in relation to that payment, but any amount which would have been treated as rent if the payment had been due to the lessor shall be treated as an annual profit or gain of that other person and chargeable to tax under Case IV of Schedule D; but, where the amount relates to a payment within subsection (4), it shall not be so treated unless the payment is due to a person connected with the lessor.

(6) For the purposes of this section, any sum other than rent paid on or in connection with the granting of a lease shall be presumed to have been paid by means of a premium except in so far as other sufficient consideration for the payment is shown to have been given.

(7) Where subparagraph (iii) of section 96(2)(a) applies, the premium, or an appropriate part of the premium, payable for or in connection with any lease mentioned in that subparagraph may be treated as having been required under any other lease.

(8) Where an amount by reference to which a person is chargeable to income tax or corporation tax by virtue of this section is payable by instalments, the tax chargeable may, if the person chargeable satisfies the Revenue Commissioners that such person would otherwise suffer undue hardship, be paid at such person's option by such instalments as the Revenue Commissioners may allow over a period not exceeding 8 years and ending not later than the time at which the last of the first-mentioned instalments is payable.

(9) Reference in this section to a sum shall be construed as including the value of any consideration, and references to a sum paid or payable or to the payment of a sum shall be construed accordingly.

99 Charge on assignment of lease granted at undervalue. [ITA67 s84; FA69 s33(1) and Sch4]

99.—(1) Where the terms subject to which a lease of a duration not exceeding 50 years was granted are such that the lessor, having regard to values prevailing at the time the lease was granted, and on the assumption that the negotiations for the lease were at arm's length, could have required the payment of an additional sum (in this section referred to as “the amount forgone”) by means of a premium or an additional premium for the grant of the lease, then, on any assignment of the lease for a consideration—

(a) where the lease has not previously been assigned, exceeding the premium (if any) for which it was granted, or

(b) where the lease has been previously assigned, exceeding the consideration for which it was last assigned,

the amount of the excess, in so far as it is not greater than the amount forgone reduced by the amount of any such excess arising on a previous assignment of the lease, shall, in the same proportion as the amount forgone would under section 98(1) have been treated as rent if it had been a premium under a lease, be treated as profits or gains of the assignor chargeable to the tax under Case IV of Schedule D.

(2) In computing the profits or gains of a trade of dealing in land, any trading receipts within this section shall be treated as reduced by the amount on which tax is chargeable by virtue of this section.

100 Charge on sale of land with right to reconveyance. [ITA67 s85]

100.—(1) Where the terms subject to which an estate or interest in land is sold provide that it shall be, or may be required to be, reconveyed at a future date to the vendor or a person connected with the vendor, the vendor shall be chargeable to tax under Case IV of Schedule D on any amount by which the price at which the estate or interest is sold exceeds the price at which it is to be reconveyed or, if the earliest date at which in accordance with those terms it would fall to be reconveyed is a date 2 years or more after the sale, on that excess reduced by 2 per cent of that excess for each complete year (other than the first) in the period between the sale and that date.

(2) Where under the terms of the sale the date of the reconveyance is not fixed, then—

(a) if the price on reconveyance varies with the date, the price shall be taken for the purposes of this section to be the lowest possible under the terms of the sale;

(b) the vendor may, before the expiration of 6 years after the date on which the reconveyance takes place, claim repayment of any amount by which tax assessed on such vendor by virtue of this section exceeded the amount which would have been so assessed if that date had been treated for the purposes of this section as the date fixed by the terms of the sale.

(3) Where the terms of the sale provide for the grant of a lease directly or indirectly out of the estate or interest to the vendor or a person connected with the vendor, this section shall apply as if the grant of the lease were a reconveyance of the estate or interest at a price equal to the sum of the amount of the premium (if any) for the lease and the value at the date of the sale of the right to receive a conveyance of the reversion immediately after the lease begins to run; but this subsection shall not apply if the lease is granted, and begins to run, within one month after the sale.

(4) In computing the profits or gains of a trade of dealing in land, any trading receipts within this section shall be treated as reduced by the amount on which tax is chargeable by virtue of this section; but where, on a claim being made under subsection (2)(b), the amount on which tax is chargeable by virtue of this section is treated as reduced, this subsection shall be deemed to have applied to the amount as reduced, and such adjustment of liability to tax shall be made (for all relevant years of assessment), whether by means of an additional assessment or otherwise, as may be necessary.

101 Relief for amount not received. [ITA67 s90; FA69 s28]

101.—Where on a claim in that behalf the person chargeable proves—

(a) that such person has not received an amount to which such person is entitled and which is to be taken into account in computing the profits or gains on which such person is chargeable by virtue of this Chapter under Case IV or V of Schedule D, and

(b) (i) if the non-receipt of the amount was attributable to the default of the person by whom it was payable, that the amount is irrecoverable, or

(ii) if the person chargeable has waived payment of the amount, that the waiver was made without consideration and was reasonably made in order to avoid hardship,

then, the person chargeable shall be treated for tax purposes for all relevant years of assessment as if such person had not been entitled to receive the amount, and such adjustment shall be made by repayment or otherwise, as the case may require; but, if all or any part of the amount is subsequently received, such person's liability to tax for all relevant years of assessment shall be appropriately readjusted by additional assessment or otherwise.

102 Deduction by reference to premium, etc. paid in computation of profits for purposes of Schedule D, Cases I and II. [ITA67 s91; FA75 s22(3) and Sch 2 PtIII]

102.—(1) In this section, “the relevant period” means—

(a) where the amount chargeable arose under section 98, the period treated in computing that amount as being the duration of the lease;

(b) where the amount chargeable arose under section 99, the period treated in computing that amount as being the duration of the lease remaining at the date of the assignment;

(c) where the amount chargeable arose under section 100, the period beginning with the sale and ending on the date fixed under the terms of the sale as the date of the reconveyance or grant, or, if that date is not so fixed, ending with the earliest date at which the reconveyance or grant could take place in accordance with the terms of the sale.

(2) Where in relation to any premises an amount (in this section referred to as “the amount chargeable”)—

(a) has become chargeable to tax under subsection (1), (2), (3), (4) or (5) of section 98 or under section 99 or 100, or

(b) would have become so chargeable but for section 103(3) or any exemption from tax,

and during any part of the relevant period the premises are wholly or partly occupied by the person for the time being entitled to the lease, estate or interest as respects which the amount chargeable arose for the purposes of a trade or profession carried on by such person, such person shall be treated, for the purpose of computing the profits or gains of the trade or profession for assessment under Case I or II of Schedule D, as paying in respect of the premises rent for any part of the relevant period during which the premises are occupied by such person (in addition to any rent actually paid) of an amount which bears to the amount chargeable the same proportion as that part of the relevant period bears to the whole, and such rent shall be taken as accruing from day to day.

(3) Where the amount chargeable arose under section 98(2) by reason of an obligation which included the incurring of expenditure in respect of which any allowance has been or will be made under Part 9, this section shall apply as if the obligation had not included the incurring of that expenditure and the amount chargeable had been calculated accordingly.

(4) Where the amount chargeable arose under section 100 and the reconveyance or grant in question takes place at a price different from that taken in calculating that amount or on a date different from that taken in determining the relevant period, subsections (1) to (3) shall be deemed to have applied (for all relevant years of assessment) as they would have applied if the actual price or date had been so taken and such adjustments of liability to tax shall be made, by means of additional assessment or otherwise, as may be necessary.

103 Deduction by reference to premiums, etc. paid in computation of profits for purposes of this Chapter. [ITA67 s92; FA69 s33(1) and Sch4 PtI; FA75 s22 and Sch2 PtIII]

103.—(1) In this section, “the relevant period” means, in relation to any amount—

(a) where the amount arose under section 98, the period treated in computing that amount as being the duration of the lease;

(b) where the amount arose under section 99, the period treated in computing that amount as being the duration of the lease remaining at the date of the assignment;

(c) where the amount arose under section 100, the period beginning with the sale and ending on the date fixed under the terms of the sale as the date of the reconveyance or grant, or, if that date is not so fixed, ending with the earliest date at which the reconveyance or grant could take place in accordance with the terms of the sale.

(2) Where in relation to any premises an amount has become or would have become chargeable to tax as mentioned in section 102(2) by reference to a lease, estate or interest, the person for the time being entitled to that lease, estate or interest shall, subject to this section, be treated for the purposes of section 97(2) as paying rent accruing from day to day in respect of the premises (in addition to any rent actually paid) during any part of the relevant period in relation to the amount for which such person is entitled to the lease, estate or interest and in all bearing to that amount the same proportion as that part of the relevant period bears to the whole.

(3) Where in relation to any premises an amount has become or would have become chargeable to tax as mentioned in section 102(2), and by reference to a lease granted out of, or a disposition of, the lease, estate or interest by reference to which the amount (in this section referred to as “the prior chargeable amount”) so became or would have so become chargeable, a person would apart from this subsection be chargeable under section 98, 99 or 100 on any amount (in this section referred to as “the later chargeable amount”), the amount on which the person is so chargeable shall be the excess, if any, of the later chargeable amount over the appropriate fraction of the prior chargeable amount or, where the lease or disposition by reference to which the person would be so chargeable extends to a part only of that premises, the excess, if any, of the later chargeable amount over so much of the appropriate fraction of the prior chargeable amount as on a just apportionment is attributable to that part of the premises.

(4) (a) In a case in which subsection (3) operates to reduce the amount on which apart from that subsection a person would be chargeable by reference to a lease or disposition, subsection (2) shall apply for the relevant period in relation to the later chargeable amount only if the appropriate fraction of the prior chargeable amount exceeds the later chargeable amount and shall then apply as if the prior chargeable amount were reduced in the proportion which the excess bears to that appropriate fraction.

(b) Notwithstanding paragraph (a). where the lease or disposition extends to a part only of the premises mentioned in subsection (3), subsection (2) and this subsection shall be applied separately in relation to that part and to the remainder of the premises, but as if for any reference to the prior chargeable amount there were substituted a reference to that amount proportionately adjusted.

(5) For the purposes of subsections (3) and (4), the appropriate fraction of the prior chargeable amount shall be the sum which bears to that amount the same proportion as the length of the relevant period in relation to the later chargeable amount bears to the length of the relevant period in relation to the prior chargeable amount.

(6) Where the prior chargeable amount arose under section 98(2) by reason of an obligation which included the incurring of expenditure in respect of which any allowance has been or will be made under Part 9, this section shall apply as if the obligation had not included the incurring of that expenditure and the prior chargeable amount had been calculated accordingly

(7) Where the prior chargeable amount arose under section 100 and the reconveyance or grant in question takes place at a price different from that taken in calculating that amount or on a date different from that taken in determining the relevant period in relation to that amount, subsections (1) to (6) shall be deemed to have applied (for all relevant years of assessment) as they would have applied if the actual price or date had been so taken and such adjustments of liability to tax shall be made, by means of additional assessment or otherwise, as may be necessary.

104 Taxation of certain rents and other payments. [ITA67 s93(1) and (2); FA69 s29]

104.—(1) (a) This section shall apply to the following payments—

(i) any rent payable in respect of any premises or easements where the premises or easements are used, occupied or enjoyed in connection with any of the concerns the profits or gains arising out of which are chargeable to tax under Case I(b) of Schedule D by virtue of section 18(2), and

(ii) any yearly interest, annuity or other annual payment reserved in respect of, or charged on or issuing out of any premises, not being a rent or a payment in respect of an easement.

(b) In paragraph (a)(i), the reference to rent shall be deemed to include a reference to a toll, duty, royalty or annual or periodical payment in the nature of rent, whether payable in money, money's worth or otherwise.

(2) (a) Any payment to which this section applies shall—

(i) in so far as it is not within any other Case of Schedule D, be charged with tax under Case IV of that Schedule, and

(ii) be treated for the purposes of sections 81(2)(m), 237 and 238 as if it were a royalty paid in respect of the user of a patent.

(b) Notwithstanding paragraph (a), where a rent mentioned in subsection (1)(a) is rendered in produce of the concern, this subsection shall apply as if paragraph (a)(ii) were deleted, and the value of the produce so rendered shall be taken to be the amount of profits or gains arising from that produce.

105 Taxation of rents: restriction in respect of certain rent and interest. [FA74 s62(1) and (2)]

105.—(1) This section shall apply to—

(a) rent in respect of premises, or

(b) interest on borrowed money employed in the purchase, improvement or repair of premises,

payable by a person chargeable to tax in accordance with section 75 on the profits or gains arising from rent in respect of those premises for a period before the date on which the premises are first occupied by a lessee for the purpose of a trade or undertaking or for use as a residence.

(2) No deduction shall be allowed for any year of assessment under section 97(2) in respect of rent or interest to which this section applies.

106 Tax treatment of receipts and outgoings on sale of premises. [FA69 s26(1) to (4)]

106.—(1) Where by virtue of a contract for the sale of an estate or interest in premises there is to be apportioned between the parties a receipt or outgoing in respect of the estate or interest which becomes due after the making of the contract but before the time at which the apportionment is to be made, and a part of the receipt is therefore receivable by the vendor in trust for the purchaser or, as the case may be, a part of the outgoing is paid by the vendor as trustee for the purchaser, the purchaser shall be treated for the purposes of tax under Case V of Schedule D as if that part had become receivable or payable on the purchaser's behalf immediately after the time at which the apportionment is to be made.

(2) Where by virtue of such a contract there is to be apportioned between the parties a receipt or outgoing in respect of the estate or interest which became due before the making of the contract, the parties shall be treated for the purposes of tax under Case V of Schedule D as if the contract had been entered into before the receipt or outgoing became due, and subsection (1) shall apply accordingly.

(3) Where on the sale of an estate or interest in premises there is apportioned to the vendor a part of a receipt or outgoing in respect of the estate or interest which becomes receivable or is paid by the purchaser after the making of the apportionment, then, for the purposes of tax under Case V of Schedule D—

(a) when the receipt becomes due or, as the case may be, the outgoing is paid, the amount of the receipt or outgoing, as the case may be, shall be treated as reduced by so much of that amount as was apportioned to the vendor, and

(b) the part apportioned to the vendor shall be treated as if it were of the same nature as the receipt or outgoing and had become receivable, or had been paid, directly by the vendor and, where it is a part of an outgoing, had become due, immediately before the time at which the apportionment is made.

(4) Any reference in subsection (1) or (2) to a party to a contract shall include a person to whom the rights and obligations of that party under the contract have passed by assignment or otherwise.

CHAPTER 9 Miscellaneous provisions

107 Apportionment of profits. [ITA67 s107; FA69 s65(1) and Sch5 PtI]

107.—(1) Where in the case of any profits or gains chargeable under Case I, II or IV of Schedule D it is necessary, in order to determine the profits or gains or losses of any year of assessment or other period, to divide and apportion to specific periods the profits or gains or losses for any period for which the accounts have been made up, or to aggregate any such profits or gains or losses or any apportioned parts of such profits or gains or losses, it shall be lawful to make such division and apportionment or aggregation.

(2) Any apportionment under this section shall be made in proportion to the number of months or fractions of months in the respective periods.

108 Statement of profits. [ITA67 s68(1)]

108.— Every statement of profits to be charged under Schedule D which is made by any person—

(a) on that person's own account, or

(b) on account of another person for whom that person is chargeable, or who is chargeable in that person's name,

shall include every source of income so chargeable.

109 Payments in respect of redundancy. [FA68 s37(1) and (3) to (7); FA74 s86 and Sch2 PtI; CTA76 s140(1) and Sch2 PtI par30; FA77 s42 and Sch1 PtIV par2]

109.—(1) In this section, “lump sum” and “rebate” have the same meanings respectively as in the Redundancy Payments Act, 1967.

(2) Where a lump sum is paid by an employer in respect of employment wholly in a trade or profession carried on by the employer and within the charge to income tax or corporation tax, the amount of the lump sum shall (if not otherwise so allowable) be allowable as a deduction in computing for the purposes of Schedule D the profits or gains or losses of the trade or profession, but if it is so allowed by virtue of this section the amount of the rebate recoverable shall (if it is not otherwise to be so treated) be treated as a receipt to be taken into account in computing those profits or gains and, if the lump sum was paid after the discontinuance of the trade or profession, the net amount so deductible shall be treated as if it were a payment made on the last day on which the trade or profession was carried on.

(3) Where a lump sum is paid by an employer in respect of employment wholly in a business carried on by the employer and expenses of management of the business are eligible for relief under section 83 or 709, the amount by which the lump sum exceeds the amount of the rebate recoverable shall (if not otherwise so allowable) be allowable as expenses of management eligible for relief under that section and, if the lump sum was paid after the discontinuance of the business, the net amount so allowable shall be treated as if it were expenses of management incurred on the last day on which the business was carried on.

(4) Where a lump sum is paid by an employer in respect of employment wholly in maintaining or managing premises and the expenses of maintaining or managing the premises were deductible under section 97, the amount by which the lump sum exceeds the amount of the rebate recoverable shall (if not otherwise allowable under that section) be treated for the purposes of section 97 as a payment made by the employer in respect of the maintenance or management of the premises and, if the payment was made after the latest time when it could be taken into account under section 97 as a payment in respect of the maintenance or management of the property, it shall be treated as having been made at that time.

(5) Relief shall not be given under subsections (2) to (4), or otherwise, more than once in respect of any lump sum and, if the employee was being employed by the employer in such a way that different parts of the employee's remuneration fell to be treated for income tax purposes in different ways, the amount (in this subsection referred to as “the excess amount”) by which the lump sum exceeds the amount of the rebate recoverable shall be apportioned to the different capacities in which the employee was employed, and subsections (2) to (4) shall apply separately to the employment in those capacities, and by reference to the apportioned part of the excess amount, instead of by reference to the full amount of the lump sum and the full amount of the rebate.

(6) Where under section 32 of the Redundancy Payments Act, 1967, a payment of the whole or part of a lump sum is made by the Minister for Enterprise, Trade and Employment, the payment shall, in so far as the employer has reimbursed that Minister, be deemed for the purposes of this section to have been made by the employer.

110 Securitisation of assets. [FA91 s31; FA96 s55(1)]

110.—(1) In this section—

“qualifying asset” means—

(a) in the case of a qualifying company which is a qualified company (within the meaning of section 446), an asset—

(i) denominated in a foreign currency which consists of, or of an interest in or a contractual right to, any loan, lease, trade or consumer receiveable or other debt or receiveable whether secured or unsecured, and

(ii) of a person (in this section referred to as “the originator”), being any government, public or local authority, company or other body corporate which—

(I) is not resident in the State, and

(II) (A) is not carrying on a trade in the State through a branch or agency, or

(B) is carrying on a trade in the State through a branch or agency and the asset was not created, acquired or held by or in connection with the branch or agency,

and

(b) in any other case, a loan made by a company (in this section referred to as “the original lender”) on the security of a mortgage of a freehold or leasehold estate or interest in the ordinary course of a trade carried on by it which consists of or includes the lending of money on such security;

“qualifying company” means a company resident in the State which carries on a business of the management of qualifying assets which it acquired from the original lender or original lenders or the originator or originators, as the case may be, and does not carry on any other business, apart from activities which are ancillary to the business of the management of those qualifying assets, but a company shall not be a qualifying company if any transaction is carried out by it otherwise than by means of a bargain made at arm's length.

(2) For the purposes of the Tax Acts—

(a) activities carried out in the course of a business carried on by a qualifying company shall be deemed to be activities carried out in the course of a trade, the profits or gains of which are chargeable to tax under Case I of Schedule D,

(b) there shall be deducted as an expense of the trade the amount, in so far as it is not—

(i) otherwise deductible, or

(ii) recoverable from the original lender or the originator, as the case may be, or under any insurance, contract of indemnity or otherwise howsoever,

of any debt which is proved to the satisfaction of the inspector to be bad and of a doubtful debt to the extent that it is estimated to be bad; but, in the case of a company referred to in paragraph (b) of the definition of “qualifying asset”, the amount of the debt shall not be deducted under this paragraph unless it would have been deductible as an expense of the trade of the original lender if that debt had been proved or estimated to be bad before it was acquired by the qualifying company, and

(c) where at any time an amount or part of an amount which has been deducted as an expense under paragraph (b) is recovered or is no longer estimated to be bad, the amount which has been so deducted shall, in so far as it is recovered or is no longer estimated to be bad, be treated as trading income of the trade at that time.

111 Allowance to owner of let mineral rights for expenses of management of minerals. [ITA67 s553; F(MP)A68 s3(2) and Sch PtI and s3(5) and Sch PtIV; FA81 s9(c)]

111.—(1) (a) Where for any year of assessment rights to work minerals in the State are let, the lessor shall be entitled on making a claim in that behalf to be repaid so much of the income tax paid by such lessor by deduction or otherwise in respect of the rent or royalties for that year as is equal to the amount of the tax on any sums proved to have been wholly, exclusively and necessarily disbursed by such lessor as expenses of management or supervision of those minerals in that year.

(b) Notwithstanding paragraph (a), no repayment of tax under that paragraph shall be made—

(i) except on proof of payment of tax on the aggregate amount of the rent or royalties, or

(ii) if, or to such extent as, the expenses of management or supervision have been otherwise allowed as a deduction in computing income for the purposes of income tax.

(2) Notice of any claim under this section together with the particulars of the claim shall be given in writing within 24 months after the expiration of the year of assessment in respect of which the claim is made, and where the inspector objects to such claim the Appeal Commissioners shall hear and determine the claim in the like manner as in the case of an appeal to them against an assessment under Schedule D, and the provisions of the Income Tax Acts relating to the statement of a case for the opinion of the High Court on a point of law shall apply.

PART 5 Principal Provisions Relating to the Schedule E Charge

CHAPTER 1 Basis of assessment, persons chargeable and extent of charge

112 Basis of assessment, persons chargeable and extent of charge. [ITA67 s110; FA90 s19(a); FA91 s6]

112.—(1) Income tax under Schedule E shall be charged annually on every person having or exercising an office or employment of profit mentioned in that Schedule, or to whom any annuity, pension or stipend chargeable under that Schedule is payable, in respect of all salaries, fees, wages, perquisites or profits whatever therefrom, and shall be computed on the amount of all such salaries, fees, wages, perquisites or profits whatever therefrom for the year of assessment.

(2) (a) In this subsection, “emoluments” means anything assessable to income tax under Schedule E.

(b) Where apart from this subsection emoluments from an office or employment would be for a year of assessment in which a person does not hold the office or employment, the following provisions shall apply for the purposes of subsection (1):

(i) if in the year concerned the office or employment has never been held, the emoluments shall be treated as emoluments for the first year of assessment in which the office or employment is held, and

(ii) if in the year concerned the office or employment is no longer held, the emoluments shall be treated as emoluments for the last year of assessment in which the office or employment was held.

CHAPTER 2 Computational provisions

113 Making of deductions. [ITA67 s111(4) and s112; FA90 s19(b)(proviso)]

113.—(1) In this section, “emoluments” means all salaries, fees, wages, perquisites or profits or gains whatever arising from an office or employment, or the amount of any annuity, pension or stipend, as the case may be.

(2) Any deduction from emoluments allowed under the Income Tax Acts for the purpose of computing an assessment to income tax under Schedule E shall be made by reference to the amount paid or borne for the year or portion of the year on the emoluments of which the computation is made.

114 General rule as to deductions. [ITA67 Sch2 rule3; FA96 s132(2) and Sch5 PtII]

114.—Where the holder of an office or employment of profit is necessarily obliged to incur and defray out of the emoluments of the office or employment of profit expenses of travelling in the performance of the duties of that office or employment, or otherwise to expend money wholly, exclusively and necessarily in the performance of those duties, there may be deducted from the emoluments to be assessed the expenses so necessarily incurred and defrayed.

115 Fixed deduction for certain classes of persons. [ITA67 Sch2 rule 4]

115.—Where the Minister for Finance is satisfied, with respect to any class of persons in receipt of any salary, fees or emoluments payable out of the public revenue, that such persons are obliged to lay out and expend money wholly, exclusively and necessarily in the performance of the duties in respect of which such salary, fees or emoluments are payable, the Minister for Finance may fix such sum as in that Minister's opinion represents a fair equivalent of the average annual amount so laid out and expended by persons of that class, and in charging the tax on such salary, fees or emoluments, there shall be deducted from the amount of such salary, fees or emoluments the sums so fixed by the Minister for Finance; but, if any person would but for this section be entitled to deduct a larger amount than the sum so fixed, that sum may be deducted instead of the sum so fixed.

CHAPTER 3 Expenses allowances and provisions relating to the general benefits in kind charge

116 Interpretation (Chapter 3). [ITA67 s119 and s122]

116.—(1) In this Chapter—

“business premises”, in relation to a body corporate, includes all premises occupied by that body for the purpose of any trade carried on by it and, except when the reference is expressly to premises which include living accommodation, includes so much of any such premises so occupied as is used wholly or mainly as living accommodation for any of the directors of the body corporate or for any persons employed by the body corporate in any employment to which this Chapter applies;

“control”, in relation to a body corporate, means the power of a person to secure—

(a) by means of the holding of shares or the possession of voting power in or in relation to that or any other body corporate, or

(b) by virtue of any powers conferred by the articles of association or other document regulating that or any other body corporate,

that the affairs of the first-mentioned body corporate are conducted in accordance with the wishes of that person;

“director” means—

(a) in relation to a body corporate the affairs of which are managed by a board of directors or similar body, a member of that board or body,

(b) in relation to a body corporate the affairs of which are managed by a single director or similar person, that director or person,

(c) in relation to a body corporate the affairs of which are managed by the members themselves, a member of the body corporate,

and includes any person in accordance with whose directions or instructions the directors of a body corporate, defined in accordance with the preceding provisions of this definition, are accustomed to act, but a person shall not, within the meaning of this definition, be deemed to be a person in accordance with whose directions or instructions the directors of a body corporate are accustomed to act by reason only that those directors act on advice given by the person in a professional capacity;

“employment” means an employment such that any emoluments of the employment would be assessed under Schedule E, and references to persons employed by, or employees of, a body corporate include any person who takes part in the management of the affairs of the body corporate and is not a director of the body corporate.

(2) Any reference in this Chapter to anything provided for a director or employee shall, unless the reference is expressly to something provided for the director or employee personally, be construed as including a reference to anything provided for the spouse, family, servants, dependants or guests of that director or employee, and the reference in the definition of “business premises” to living accommodation for directors or employees shall be construed accordingly.

(3) (a) Subject to subsection (4) and paragraphs (b) and (c), the employments to which this Chapter applies shall be employments the emoluments of which, estimated for the year of assessment in question according to the Income Tax Acts and on the basis that they are employments to which this Chapter applies, and without any deduction being made under section 114 in respect of money expended in performing the duties of those employments, are £1,500 or more.

(b) Where a person is employed in 2 or more employments by the same body corporate and the total of the emoluments of those employments for the year of assessment in question estimated in accordance with paragraph (a) is £1,500 or more, all those employments shall be treated as employments to which this Chapter applies.

(c) Where a person is a director of a body corporate, all employments in which the person is employed by the body corporate shall be treated as employments to which this Chapter applies.

(4) All the directors of, and persons employed by, a body corporate over which another body corporate has control shall be treated for the purposes of paragraphs (b) and (c) of subsection (3) (but not for any other purpose) as if they were directors of that other body corporate or, as the case may be, as if the employment were an employment by that other body corporate.

117 Expenses allowances. [ITA67 s116; FA74 s86 and Sch2 PtI]

117.—(1) Subject to this Chapter, any sum paid in respect of expenses by a body corporate to any of its directors or to any person employed by it in an employment to which this Chapter applies shall, if not otherwise chargeable to income tax as income of that director or employee, be treated for the purposes of section 112 as a perquisite of the office or employment of that director or employee and included in the emoluments of that office or employment assessable to income tax accordingly; but nothing in this subsection shall prevent a claim for a deduction being made under section 114 in respect of any money expended wholly, exclusively and necessarily in performing the duties of the office or employment.

(2) The reference in subsection (1) to any sum paid in respect of expenses includes a reference to any sum put by a body corporate at the disposal of a director or employee and paid away by him or her.

118 Benefits in kind: general charging provision. [ITA67 s117; FA73 s41; FA74 s86 and Sch2 PtI; FA96 s131(9)(a)]

118.—(1) Subject to this Chapter, where—

(a) a body corporate incurs expense in or in connection with the provision, for any of its directors or for any person employed by it in an employment to which this Chapter applies, of—

(i) living or other accommodation,

(ii) entertainment,

(iii) domestic or other services, or

(iv) other benefits or facilities of whatever nature, and

(b) apart from this section the expense would not be chargeable to income tax as income of the director or employee,

then, sections 112, 114 and 897 shall apply in relation to so much of the expense as is not made good to the body corporate by the director or employee as if the expense had been incurred by the director or employee and the amount of the expense had been refunded to the director or employee by the body corporate by means of a payment in respect of expenses, and income tax shall be chargeable accordingly.

(2) Subsection (1) shall not apply to expense incurred by the body corporate in or in connection with the provision for a director or employee in any of its business premises of any accommodation, supplies or services provided for the director or employee personally and used by the director or employee solely in performing the duties of his or her office or employment.

(3) Subsection (1) shall not apply to expense incurred by the body corporate in or in connection with the provision of living accommodation for an employee in part of any of its business premises which include living accommodation if the employee is, for the purpose of enabling the employee properly to perform his or her duties, required by the terms of his or her employment to reside in the accommodation and either—

(a) the accommodation is provided in accordance with a practice which since before the 30th day of July, 1948, has commonly prevailed in trades of the class in question as respects employees of the class in question, or

(b) it is necessary in the case of trades of the class in question that employees of the class in question should reside on premises of the class in question;

but this subsection shall not apply where the employee is a director of the body corporate in question or of any other body corporate over which that body corporate has control or which has control over that body corporate or which is under the control of a person who also has control over that body corporate.

(4) Subsection (1) shall not apply to expense incurred by the body corporate in or in connection with the provision of meals in any canteen in which meals are provided for the staff generally.

(5) Subsection (1) shall not apply to expense incurred by the body corporate in or in connection with the provision for a director or employee, or for the director's or employee's spouse, children or dependants, of any pension, annuity, lump sum, gratuity or other like benefit to be given on the death or retirement of the director or employee.

(6) Any reference in this section to expense incurred in or in connection with any matter includes a reference to a proper proportion of any expense incurred partly in or in connection with that matter.

(7) Where expense is incurred by a person connected with a body corporate, being expense which if incurred by the body corporate would be expense of the kind mentioned in subsection (1)(a), the body corporate shall be deemed for the purposes of this section to have incurred the expense, and subsection (1) shall apply accordingly in relation to any person, being a director or employee of the body corporate, in respect of whom the expense was incurred.

(8) A person shall be regarded as connected with a body corporate for the purposes of subsection (7) if the person is—

(a) a trustee of a settlement (within the meaning of section 794) made by the body corporate, or

(b) a body corporate,

and would be regarded as connected with the body corporate for the purposes of section 10.

119 Valuation of benefits in kind. [ITA67 s118(1), (2) and (4); FA69 s32(b) and (c)]

119.—(1) Any expense incurred by a body corporate in the acquisition or production of an asset which remains its own property shall be disregarded for the purposes of section 118.

(2) Where the making of any provision mentioned in section 118(1) takes the form of a transfer of the property in any asset of the body corporate and, since the acquisition or production of that asset by the body corporate, that asset has been used or has depreciated, the body corporate shall be deemed to have incurred in the making of that provision expense equal to the value of that asset at the time of the transfer.

(3) Where an asset which continues to belong to the body corporate is used wholly or partly in the making of any provision mentioned in section 118(1), the body corporate shall be deemed for the purposes of that section to incur (in addition to any other expense incurred by it in connection with the asset, not being expense to which subsection (1) applies) annual expense in connection with the asset of an amount equal to the annual value of the use of the asset, but where any sum by means of rent or hire is payable by the body corporate in respect of the asset—

(a) if the annual amount of the rent or hire is equal to or greater than the annual value of the use of the asset, this subsection shall not apply, and

(b) if the annual amount of the rent or hire is less than the annual value of the use of the asset, the rent or hire shall be disregarded for the purposes of section 118(1).

(4) In the case of an asset being premises, the annual value of the use of the asset shall be taken for the purposes of subsection (3) to be the rent which might reasonably be expected to be obtained on a letting from year to year if the tenant undertook to pay all usual tenant's rates, and if the landlord undertook to bear the costs of the repairs and insurance, and the other expenses, if any, necessary for maintaining the premises in a state to command that rent.

120 Unincorporated bodies, partnerships and individuals. [ITA67 s123]

120.—(1) This Chapter shall apply in relation to unincorporated societies and other bodies as it applies in relation to bodies corporate and, in connection with this Chapter, the definition of “control” in section 116(1) shall, with the necessary modifications, also so apply.

(2) This Chapter shall apply in relation to any partnership carrying on any trade or profession as it would apply in relation to a body corporate carrying on a trade if so much of this Chapter as relates to directors of the body corporate or persons taking part in the management of the affairs of the body corporate were deleted; but—

(a) “control”, in relation to a partnership, means the right to a share of more than 50 per cent of the assets, or of more than 50 per cent of the income, of the partnership, and

(b) where a partnership carrying on any trade or profession has control over a body corporate to which this Chapter applies (“control” being construed for this purpose in accordance with the definition of that term in section 116(1))—

(i) any employment of any director of that body corporate by the partnership shall be an employment to which this Chapter applies, and

(ii) all the employments of any person who is employed both by the partnership and by the body corporate (being employments by the partnership or the body corporate) shall, for the purpose of ascertaining whether those employments or any of them are employments to which this Chapter applies, be treated as if they were employments by the body corporate.

(3) Subsection (2) shall apply in relation to individuals as it applies in relation to partnerships, but nothing in this subsection shall be construed as requiring an individual to be treated in any circumstances as under the control of another person.

CHAPTER 4 Other benefit in kind charges

121 Benefit of use of car. [FA82 s4(2) to (6) and (9)(a) and (b)(i), (ii) and (iv); FA92 s8(a),(b)(i) and (ii)(V) and Sch1 PtV; FA96 s6]

121.—(1) (a) In this section—

“business mileage for a year of assessment”, in relation to a person, means the total number of whole miles travelled in the year in the course of business use by that person of a car or cars in respect of which this section applies in relation to that person;

“business use”, in relation to a car in respect of which this section applies in relation to a person, means travelling in the car which that person is necessarily obliged to do in the performance of the duties of his or her employment;

“car” means any mechanically propelled road vehicle constructed or adapted for the carriage of passengers, other than a vehicle of a type not commonly used as a private vehicle and unsuitable to be so used;

“employment” means an office or employment of profit such that any emoluments (within the meaning of section 113) of the office or employment would be charged to tax, and cognate expressions shall be construed accordingly;

“private use”, in relation to a car, means use of the car other than business use;

“relevant log book”, in relation to a person and a year of assessment, means a record maintained on a daily basis of the person's business use for the year of assessment of a car or cars in respect of which this section applies in relation to that person for that year of assessment which—

(i) contains relevant details of distances travelled, nature and location of business transacted and amount of time spent away from the employer's place of business, and

(ii) is certified by the employer as being to the best of the employer's knowledge and belief true and accurate.

(b) For the purposes of this section—

(i) (I) a car made available in any year to an employee by reason of his or her employment shall be deemed to be available in that year for his or her private use unless the terms on which the car is so made available prohibit such use and no such use is made of the car in that year:

(II) a car made available to an employee by his or her employer or by a person connected with the employer shall be deemed to be made available to him or her by reason of his or her employment (unless the employer is an individual and it can be shown that the car was made so available in the normal course of his or her domestic, family or personal relationships);

(III) a car shall be treated as available to a person and for his or her private use if it is available to a member or members of his or her family or household;

(IV) references to a person's family or household are references to the person's spouse, sons and daughters and their spouses, parents and servants, dependants and guests;

(ii) in relation to a car in respect of which this section applies, expenditure in respect of any costs borne by a person connected with the employer shall be treated as borne by the employer;

(iii) the original market value of a car shall be the price (including any duty of customs, duty of excise or value-added tax chargeable on the car) which the car might reasonably have been expected to fetch if sold in the State singly in a retail sale in the open market immediately before the date of its first registration in the State under section 6 of the Roads Act, 1920, or under corresponding earlier legislation, or else-where under the corresponding legislation of any country or territory.

(2) (a) In relation to a person chargeable to tax in respect of an employment, this section shall apply for a year of assessment in relation to a car which, by reason of the employment, is made available (without a transfer of the property in it) to the person and is available for his or her private use in that year.

(b) In relation to a car in respect of which this section applies for a year of assessment—

(i) Chapter 3 of this Part shall not apply for that year in relation to the expense incurred in connection with the provision of the car, and

(ii) there shall be treated for that year as emoluments of the employment by reason of which the car is made available, and accordingly chargeable to income tax, the amount, if any, by which the cash equivalent of the benefit of the car for the year exceeds the aggregate for the year of the amounts which the employee is required to make good and actually makes good to the employer in respect of any part of the costs of providing or running the car; but any part of such aggregate in respect of which the cash equivalent is reduced under subsection (3)(a) shall be disregarded for the purposes of this subparagraph.

(3) (a) The cash equivalent of the benefit of a car for a year of assessment shall be 30 per cent of the original market value of the car, but shall be reduced—

(i) where no part of the cost for that year of the fuel used in the course of the private use of the car by the employee is borne directly or indirectly by the employer, by 4.5 per cent of the original market value of the car,

(ii) where no part of the cost for that year of the insurance of the car is borne directly or indirectly by the employer, by 3 per cent of the original market value of the car,

(iii) where no part of the cost for that year of repair and servicing of the car is borne directly or indirectly by the employer, by 3 per cent of the original market value of the car, and

(iv) where no part of the excise duty for that year on the licence under section 1 of the Finance (Excise Duties) (Vehicles) Act, 1952, relating to the car is borne directly or indirectly by the employer, by 1 per cent of the original market value of the car.

(b) Where a car in respect of which this section applies in relation to a person for a year of assessment is made available to the person for part only of that year, the cash equivalent of the benefit of that car as respects that person for that year shall be an amount which bears to the full amount of the cash equivalent of the car for that year (ascertained under paragraph (a)) the same proportion as that part of the year bears to that year.

(4) (a) Where in relation to a person the business mileage for a year of assessment exceeds 15,000 miles, the cash equivalent of the benefit of the car for that year, instead of being the amount ascertained under subsection (3), shall be the percentage of that amount applicable to that business mileage under the Table to this subsection.

(b) In the Table to this subsection, any percentage shown in column (3) shall be that applicable to any business mileage for a year of assessment which—